RFAs’ Financial Structures and Lending Capacities: a statutory, accounting and credit rating perspective
Download PDF: Working Paper 44
This paper presents the diverse financial structures of Regional Financing Arrangements (RFAs) and analyses the impact of financial structures on RFAs’ lending capacity
Authors: Gong Cheng (ESM), Rudolf Alvise Lennkh (Scope Ratings)
Abstract:
This paper documents the diverse financial structures – including capital structures and funding strategies – of Regional Financing Arrangements (RFAs) and offers an analysis of RFAs’ lending capacity from a statutory, accounting and credit rating perspective. Using credit rating agencies’ methodologies, the paper presents the dynamic relationship between RFAs’ financial structures, the support from their member states and their resulting creditworthiness. A stylised model is developed to demonstrate how the relative size of an institution’s paid-in and callable capital, together with its member states’ support, could have an impact on the overall credit rating and lending capacity of an RFA. This paper contributes to the growing policy discussions on the heterogeneity of RFAs and their rising importance in the Global Financial Safety Net.
Disclaimer: This Working Paper should not be reported as representing the views of the ESM. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the ESM or ESM policy. No responsibility or liability is accepted by the ESM in relation to the accuracy or completeness of the information, including any data sets, presented in this Working Paper.
Keywords: Regional Financing Arrangements, IMF, Credit rating, Capital, Lending capacity, Global Financial Safety Net
JEL codes: F33; F34; F53; F55; G24